House Committee Approves Funding Provision for GUIDE Act to Support MSMEs

Strategic Insights -

The House Committee on Appropriations has given its approval "in principle" to the funding provision of the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Act. The measure now seeks to grant additional paid-up capital of P7.5 billion and P2.5 billion to the Land Bank of the Philippines (LBP) and Development Bank of the Philippines (DBP), respectively, to assist micro, small, and medium enterprises (MSMEs) adversely affected by the COVID-19 crisis.

The committee approved the substitute measure to House Bill No. 6795, the proposed GUIDE Act, subject to revising the language of Section 20 or the funding provision. National Treasurer Rosalia De Leon and DBM Assistant Secretary Rolly Toledo cited the need to revise the language to accurately reflect the funding requirements.

Key Takeaways:

  • The committee approved the funding provision of the GUIDE Act "in principle" to support MSMEs affected by the COVID-19 crisis.
  • The measure aims to grant additional paid-up capital of P7.5 billion and P2.5 billion to the LBP and DBP, respectively.
  • National Treasurer Rosalia De Leon proposed an additional P7.5 billion equity infusion for the LBP to reach the original intention of P35 billion under the GUIDE bill.
  • DBM Assistant Secretary Rolly Toledo noted that the P2.5 billion additional equity infusion for DBP is not necessary, as the P5 billion provided in the Bayanihan 2 bill would already reach the authorized capital of P15 billion for DBP.
  • The committee approved the revised language of Section 20 or the appropriations provision of the bill, subject to submission by the Department of Budget and Management (DBM) and the Bureau of Treasury (BTr).
  • Rep. Junie Cua, chairperson of the House Committee on Banks and Financial Intermediaries, is the main proponent of the GUIDE measure, which seeks to grant incentives and exemption privileges to government financial institutions, including the LBP and DBP.

Statistics:

  • P10 billion total funding requirement for LBP and DBP (P7.5 billion for LBP and P2.5 billion for DBP).
  • P35 billion original intention for LBP equity infusion under the GUIDE bill.
  • P27.5 billion already provided under the Bayanihan 2 bill for LBP.
  • P12.5 billion earmarked for DBP under the Bayanihan 2 bill.
  • P15 billion authorized capital for DBP.

Sources:

  • Manila Bulletin
  • House Committee on Appropriations
  • Department of Budget and Management (DBM)
  • Bureau of Treasury (BTr)